Where did you find your crypto-friendly accountant? I've been looking for someone who won't charge me these insane rates but have had trouble finding anyone who seems knowledgeable about crypto tax rules.

I found mine through a local crypto meetup group. There are also some online directories specifically for crypto-friendly accountants - try searching "crypto tax professional directory" and you'll find a few options. The key questions to ask are: what software do they use for crypto tax preparation, how do they handle missing cost basis information, and if they have a flat fee structure for crypto reporting regardless of transaction count. Any accountant who acts like crypto is some mysterious new technology or charges by the transaction is probably not your best option in 2025.

This is really good advice. I'd add that you should sit down with your accountant and go through the forms together before filing to make sure everything transfers correctly. And keep copies of EVERYTHING, including all the work you did to calculate your crypto basis. The IRS has been focusing more on crypto compliance lately.

Thanks for this advice! I'm still waiting on those statements from T-Rowe, but this gives me a good framework for organizing everything. Do you think I should attach some kind of explanation with my tax return explaining why I'm reporting different figures than what's on the 1099-Q?

You don't need to attach an explanation to your regular tax return. When you report a distribution from an education account on Form 8863, you're only reporting the taxable portion anyway. If you're concerned, you can certainly keep a written explanation with your tax records that you could provide in case of questions. But don't send additional documentation unless specifically requested by the IRS.

I had this issue spanning 4 years of distributions. What worked for me was calculating the initial ratio of contributions to earnings before ANY distributions started, then applying that same ratio to all distributions. So if your account was 80% contributions and 20% earnings when you first started taking money out, you'd consider all distributions to be split that same way.

Thanks, that makes sense. I think I've actually been doing it wrong then. I've been trying to recalculate the ratio each year which has been a total nightmare with all the market fluctuations. I'll try using the initial ratio approach instead.

That's a great point about the state agencies. Do you know if there's an easy way to find out which agency handles this in my state? I'm in Michigan if that helps.

For Michigan specifically, you'd want to contact the Department of Licensing and Regulatory Affairs (LARA). They handle professional licensing and regulation for tax preparers. Their website has a complaint form you can fill out. If your preparer claimed to be a CPA but wasn't, that's also something LARA would be interested in knowing about. In addition to filing with them, the Michigan Attorney General's office has a Financial Crimes Division that takes complaints about financial fraud, which this could qualify as.

Exactly! Check box 128 on your Form 1040 from last year (or corresponding box if it was a different tax year). A legitimate preparer must sign and include their PTIN. If they didn't, that's an immediate violation.

Thanks for the response! I probably have about 15-20 transactions total. Not a ton, but enough to be annoying to calculate manually. There were definitely price movements between when I bought the BTC and when I traded it... some trades I made when BTC was way up and others when it had dropped.

With 15-20 transactions and significant price movements, it's probably worth using either TaxAct's crypto feature or one of the specialized services others have mentioned. Trying to manually calculate 20 transactions with varying cost basis is error-prone and time-consuming. Make sure you also track the cost basis of those other coins you received in the trades, because when/if you eventually sell or trade those, you'll need to know what they were "worth" when you acquired them to calculate future gains/losses. This is where specialized crypto tax software really helps, as it maintains that chain of cost basis calculations.

Yes, you should still report it. The silver lining is that those losses can offset other capital gains or up to $3,000 of ordinary income. So reporting your crypto losses could actually reduce your overall tax bill!

Wait seriously? I had no idea about the Roth IRA limitation! I thought the income limits were just reduced, not basically eliminated. That's a huge factor to consider...

Yes, it's one of the most restrictive aspects of filing separately that catches people by surprise. The income limit for Roth IRA contributions when filing separately is just $10,000 - after that, you can't contribute at all. It's not a gradual phase-out like with other filing statuses. For comparison, with married filing jointly in 2024, the Roth contribution starts phasing out at $230,000 and completely phases out at $240,000 of modified AGI.

This is the approach we took. My wife is a public school teacher going for PSLF, so we file separately to keep her payments low. Yes, we pay more in taxes each year, but after running the numbers, we'll come out ahead by about $42,000 over the 10-year forgiveness period.